Repeal of the Boren Amendment

linked Medicaid nursing home rates with minimum federal and state quality of care standards. As part of the Omnibus Reconciliation Act of 1980, the “Boren amendment” required that Medicaid nursing home rates be “reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards” (Section 1902(a)(13) of the Social Security Act). State Medicaid officials overwhelmingly came to oppose the amendment as impossible to operationalize, believing that they were forced by the courts to spend too much on nursing homes at the expense of other services. The federal Balanced Budget Act of 1997 repealed the Boren amendment, giving states far greater freedom in setting nursing home payment rates. The nursing home industry warned that Medicaid reimbursement levels already are too low, and that further reductions would adversely affect quality of care. Indeed, poorquality nursing home care is gaining increasing attention. For example, in response to a recent General Accounting Office report identifying glaring quality of care deficiencies in California nursing homes, the U.S. Senate Special Committee on Aging held critical hearings on nursing homes and their regulators, and President Clinton unveiled tougher enforcement standards.1 Despite nursing home industry claims that low payment rates inhibit quality of care, Medicaid rates for nursing facility care are a logical target for states trying to reduce the growth rate of long-term care expenditures. Nursing home care accounted for 20 percent of Medicaid expenditures in 1996. Whereas the financial effect of reforms such as expanding home and community-based services and integrating acute and long-term care is uncertain, with savings likely to occur some time in the future, the impact of nursing home rate reductions on state budgets is predictable, immediate, and potentially large. Similarly, with nearly 70 percent of nursing home residents dependent on Medicaid to pay for their care, it is hard to overstate the importance of Medicaid to the nursing home industry.2 As states gain freedom to cut nursing home reimbursement, it becomes more important to understand whether and how these changes might affect quality of care in nursing homes. Repeal of the “Boren Amendment”: Implications for Quality of Care in Nursing Homes THE URBAN INSTITUTE